Case Note 01/2017 – Nationwide Building Society v Niblett (2009) – Constructive Unfair Dismissal

”Ian Watts – providing legal services in Gibraltar since 2002”

By Ian Watts -Barrister & Acting Solicitor

In this case note, Ian Watts discusses the case of Nationwide Building Society v Niblett [2009] UKEAT 0524_08_0207 (Appeal No. UKEAT/0524/08) [“the Nationwide Case”]. [See: BAILII]

Synopsis

This case involved an appeal by Nationwide against a decision of the Bristol Employment Tribunal, the Employment Judge having found that Mr Niblett had been constructively dismissed by Nationwide.

Topics covered: CONSTRUCTIVE UNFAIR DISMISSAL

Paragraph references are to those contained in the Judgment in the Nationwide Case cited aforesaid.

Facts of the Nationwide Case:

Mr Niblett worked for Nationwide. Apart from his basic remuneration, he was entitled to overtime payment authorised by his line manager. In November and December 2006 he was paid overtime for which he had made no claim to his line manager (rather, the overtime was signed off by a technical manager).

Sometime in 2007, Nationwide commenced an investigation into potential fraud regarding certain employees who had claimed or received overtime monies to which they were not entitled. Mr Niblett was one of a group of staff members who was interviewed. In August 2007, disciplinary proceedings were commenced against Mr Niblett on the back of an allegation that he had fraudulently received overtime payments not authorised by his line manager.

A disciplinary hearing ensued and the disciplining manager was satisfied that no fraud or collusion had taken place between Mr Niblett and his technical manager. However, Nationwide decided to issue a “final written warning” to him for “willingly accepting payments from a non mandated employee without appropriate challenge” (para.10).

The disciplinary policy of Nationwide provided for written warnings to be kept on file for two years; this would have a bearing on, inter alia, salary review and promotion opportunities. Mr Niblett therefore made an internal appeal against the decision to issue him with a final written warning: however, his appeal was dismissed.

Further to his unsuccessful appeal, Mr Niblett raised his grievance with Nationwide about the outcome of the appeal above-mentioned. He pursued his grievance and Nationwide later said that what he was seeking to do via raising his grievance was an abuse of procedure.

Mr Niblett later resigned and issued a complaint for constructive dismissal before the Employment Tribunal.

The Decision in Nationwide

The Employment Appeal Tribunal [“EAT”] in following Western Excavating (ECC) v Sharp [1978] ICR 221 endorsed the principle at law that the entitlement of an employee to terminate his contract of employment is where there is a repudiatory breach on the part of the employer.

Furthermore, the first issue to be decided by an employment tribunal in a case of constructive dismissal is which term is alleged to have been breached. In the Nationwide Case, it was contended on the par of Mr Niblett that the term breached was that of mutual trust and confidence between employee and employer.

In the course of its ruling, the EAT referred to two prior authorities of the EAT on the application of the implied term of mutual trust between employer and employee in the context of the manner in which grievance procedures were operated: Abbey National plc v. Fairbrother [2007] IRLR 320 and Claridge v Daler Rowney Limited [2008] IRLR 672. The EAT held that in its approach to the question of constructive dismissal, the Bristol Employment Tribunal had erred in law.

Mr Richardson J held (at para.37):

“On the basis of Fairbrother and Claridge, where it is alleged that an employer has broken the implied term of trust and confidence in the way a grievance has been handled, whichever juridical basis is adopted, the position will be as follows.

(1) The Tribunal must identify the respects in which the employer’s conduct of the grievance procedure is alleged to have broken the implied term”

(2) The Tribunal must consider whether in those respects the employer’s conduct of the grievance procedure was reasonable, ie whether it was within the band or range of reasonable responses open to an employer dealing with the grievance. If it was within that band, the employer will not be in breach of the implied term.

(3) Even if the employer’s conduct of the grievance procedure in those respects was unreasonable, the Tribunal must still consider whether the employer’s conduct was calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee.”

As to the third point, the Learned Judge was seeking to emphasise that “[e]ven if the operation of the procedure was unreasonable, it does not necessarily follow that there was a breach of the implied obligation of trust and confidence” [at para.41]. An Employment Tribunal must therefore also consider (in relation to the breach of the implied latter term), whether the conduct on the part of the employer was “ … without proper and reasonable cause and must be calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee” [para.38].

Richardson J then went on to say [at para.43]:

“We find it very difficult to envisage circumstances in which an employer will be in breach of the implied term of trust and confidence unless the employer’s conduct is unreasonable. The mere fact of unreasonable conduct, is as we hope we have demonstrated, never sufficient … (i)n determining whether an employer’s conduct was reasonable, a Tribunal should always bear in mind that there may be more than one reasonable course to take – for example, when operating a grievance or disciplinary procedure. It is, we think, for these reasons, that the Appeal Tribunal in Fairbrother and Claridge referred to a “range of reasonable responses” test. We do not see why it should be wrong for a Tribunal to ask itself whether an employer has acted reasonably or unreasonably, so long as it goes to ask the fundamental question whether the conduct, even if unreasonable, is calculated to destroy or seriously damage the relationship of trust and confidence between employer and employee”.

In the view of the EAT in the Nationwide Case, it was for the latter reason that the Employment Tribunal had erred in law in determining the issue of constructive dismissal. Accordingly, Nationwide’s appeal was allowed.

Notwithstanding the outcome of the appeal, the EAT also took the view that it would not be possible for it to substitute it’s judgment to that of the lower Employment Tribunal on the issue of whether there had been a repudiatory breach of contract on the part of Nationwide so as to give rise to constructive dismissal – accordingly, the case was to be remitted to a freshly constitued Employment Tribunal for re-hearing.

The common law of England & Wales applies in Gibraltar (subject to local modifications). Decisions such as that of the English Employment Appeal Tribunal in the Nationwide Case carry persuasive effect in Gibraltar. For further advice on Gibraltar Employment Law, please contact Ian Watts.